The Gristle

Fissures
  • Google+

FISSURES: The environmental scoping of the proposed Millennium Bulk Terminals in Longview begins this month, with a series of public hearings planned through October and into November. As with the proposed Gateway Pacific Terminal (GPT) project proposed at Cherry Point, the Longview scoping allows the joint county, state, and federal lead agencies to decide what impacts to analyze based on comments from the public, other agencies and the tribes.

Scoping efforts are underway in earnest even as the fortunes of the coal export industry are everywhere in a state of collapse. Pacific Rim coal prices have plummeted since their high in January 2011, of $142 per ton, to prices last week below $77 per ton—roughly half of their former peak. In tandem with the decline, plans for coal export facilities at Grays Harbor and at Coos Bay on the Oregon Coast have been shelved. A third, the Morrow Pacific pier along the Columbia River, hangs in the balance.

Analysts forecast the market is unlikely to rebound. A detailed industry report released in June by Bernstein Research predicted the “global coal market” had slowed. Demand from China, the primary driver or the backstop behind every new coal industry investment over the last decade, is in permanent decline for a variety of structural reasons, they reported. Most significant of these is domestic coal production coming online in China.

“From 2015, the large-scale Chinese miners will take over the entire domestic market, pushing out imports and raising, for the first time since 2008, the possibility of Chinese coal net exports,” the analysts reported. “Once Chinese coal demand starts to fall, there is no robust growth market for seaborne thermal coal anywhere. Developed market consumption is weak everywhere due to some combination of low gas prices, rising environmental concerns and low levels of industrial activity.”

The findings were echoed by IHS-CERA and similar banking and financial analysts who each forecast a long, terminal decline in Chinese coal imports.

Godman Sachs, a principle investor in the Cherry Point terminal, admitted to investors last week that due to a global oversupply of coal, “The window for thermal coal investment is closing.” Goldman Sachs Infrastructure partners holds 49 percent of the purse-strings for GPT.

In perhaps the most telling of recent events, Ambre Energy—the financially strapped Australian coal exporter—last week retired efforts to claw ownership of the struggling Decker mine in southern Montana from Wyoming-based Cloud Peak Energy. In December, the two companies agreed to a tentative settlement that would allow Ambre to acquire the mine for a cleanup cost of $71 million together with a purchase of the mine for approximately $64 million. Ambre was unable to come up with the money before a court-imposed deadline of Aug. 30.

“Ambre Energy’s purchase of Cloud Peak Energy’s 50 percent interest in the Decker Mine in Montana is not expected to be completed for the foreseeable future,” the companies announced in a glum press release.

The takeaway message is a vote of no-confidence from investors in the coal export business.

“If financial markets thought that these projects were worthwhile, wouldn’t some deep-pocketed investor be willing to front them some more cash?” observed Clark Williams-Derry, research director for the public policy group Sightline.

Importantly, Ambre spearheads two of the three remaining coal export projects in Oregon and Washington, and remains a central player in the development of the Cherry Point pier. The company asked Oregon officials last spring for a five-month delay in considering permits for its proposed Port of Morrow facility while the company strengthened its financial portfolio, a forbearance that ends soon. The environmental scoping for the Morrow pier closed in August, generating a record 16,000 comments about coal export. Oregon officials estimated about 80 percent of the comments opposed the plan.

Clark Moseley, CEO of Ambre Energy North America, confessed that current prices might prevent the Morrow terminal from making a profit.

“At today’s thermal prices, we could break even at best,” Moseley admitted to reporters.

Fissures form—albeit tangentially—on the Labor side of the equation as well.

In a surprise break over the Labor Day weekend, the International Longshore and Warehouse Union, the most vocal backers of Pacific Northwest export facilities, withdrew from affiliation with the larger and more influential AFL-CIO. The break came as longshore workers around the region stood in solidarity with grain handlers locked out of contract negotiations with the Mitsui-United Grain terminal in Vancouver, Wash. The larger AFL-CIO declined to stand with them one week before the federation is set to hold its national convention in Los Angeles.

The ILWU, known for its militant traditions and progressive politics, has been drawn into turf wars with other unions in recent years—particularly in the grain export terminals of the Pacific Northwest, where longshore workers have been locked in a high-stakes battle over master contract standards since 2011.

Labor officials see the Mitsui debacle as part of a larger coordinated effort to break the coast-wide contract with the ILWU, playing one port against another, with serious implications for ports being considered for construction. GPT was originally envisioned to ship mostly grain.

The ILWU is the most activist, the most old-school, and the least centrally led labor union, the strongest voice in support of coal exports, an issue that has fractured the progressive wings of Labor and the Democratic Party.

The Northwest Washington Central Labor Council (AFL-CIO) last week refused to endorse two Whatcom County Democrats, Barry Buchanan and Carl Weimer, precisely for the party’s position on a coal export facility at Cherry Point. The decision infuriated local Democrats.


blog comments powered by Disqus

 

Past Columns

September 2, 2014

RAILROADED!: Bellingham and Whatcom County got a bitter taste of the future last month when track work along the BNSF main line temporarily closed the city’s most popular park. Boulevard… more »

August 26, 2014

NEW DIRECTIONS: Bellingham City Council President Cathy Lehman will resign her elected office at the end of this year, perhaps triggering upheaval in one of the city’s most engaged and… more »

August 19, 2014

ON THE SPECTRUM: In a convoluted and disappointing process, Bellingham City Council last week overrode the objections of vocal critics and amended the Sunnyland neighborhood plan to include a variety… more »

August 12, 2014

INLAND EMPIRE: In a low-stakes, low turnout primary broadly avoided by progressive voters, Democrats struggled in upper northwest Washington—a fascinating augury into election results in November.

According to the Whatcom… more »

August 5, 2014

WORKING FORESTS: Every political scrap produces winners and losers; and it is a measure of the quality of winners that they leave aside the mandates, the agendas, the vendettas and… more »

July 29, 2014

WHEN FRINGE GOES MAINSTREAM: Ballots continue to flow in the August Top Two primary, a queer beast with an unusual pedigree that need not necessarily produce a candidate each from… more »

July 22, 2014

DICKERING DOCKS: As Cherry Point races to become the energy export mecca of the Pacific Northwest, efforts are simultaneously underway that could cripple Whatcom’s ability to economically benefit from that… more »

July 15, 2014

‘WATER, WATER EVERYWHERE:’ If doing the same thing repeatedly and expecting a different result is the definition of insanity, what does hearing the same thing repeatedly and thinking it means… more »

July 8, 2014

CALL OF THE MILD: Partisanship and gridlock, they’re not at all the same thing.

Partisanship, which frequently springs from strongly held views, can set the size and shape of a… more »

Cascadia Weekly

Home | Views | | Archives | Advertising | Contact | RSS

© 1998-2014 Cascadia Newspaper Company LLC | P.O. Box 2833, Bellingham WA 98227-2833 | (360) 647-8200